Imax Corp. is becoming a Wall Street darling after winning a couple of big box-office bets – “American Sniper” is the latest – and showing more nimbleness and flexibility with its giant-screen movie offerings than ever before.
“Of all the companies in the exhibition sector, I don’t think any are positioned better for 2015 than Imax,” B. Riley analyst exhibition specialist Eric Wold told TheWrap on Tuesday.
Imax executives declined comment ahead of next month’s fourth-quarter earnings report, but Wold wasn’t the one paying attention. Trading in Imax stock spiked to roughly 1.3 million shares Tuesday, far above its typical 400-500, as it closed up 0.13 percent at $30.18.
Much of the boost is because this year has a good shot at being the biggest ever at the domestic box office, and is jammed with Imax-friendly action fare like “Avengers: The Age of Ultron,” a new James Bond movie, “Jurassic World” and “Star Wars: The Force Awakens.”
Imax stock has risen 22 percent since June, and more than 7 percent since the start of the year. Analysts were taking particular note of unusual interest in six-month options at $33 as well, signaling investor confidence that the Toronto-based Canadian company’s positive recent run will get even better.
But another reason for the surge is that Imax has demonstrated the ability to tweak its film slate as never before, with late-game moves to land “American Sniper” and the space epic “Interstellar,” the latter at the expense of “The Hunger Games: Mockingjay – Part 1.” Both of those became box office hits and benefited greatly from the premiums charged for screenings at Imax’s 336 domestic theaters, even thought the late-pickups left little time for marketing.
The $10.5 million that Imax screens delivered on “American Sniper” was more than any R-rated movie, or any film playing on the Martin Luther King holiday weekend ever. Because Imax landed the film just eight days before its wide release, those returns weren’t factored into first quarter projections for the big screen company or the overall box office, and that may be driving some of the trading. “Management’s ability to quickly add incremental films to the line-up will drive profitable box office revenues given the scale of the Imax network and will continue to be an important supplemental contributor in the coming years well beyond the key tentpole films.,” said Wold.
The 11th-hour addition of an extra week to the run for HBO’s “Game of Thrones,” which lands on Jan. 29, underscored the company’s willingness and ability to be flexible. And that was after Imax leadership earned brownie points from analysts for innovation in trying a TV series on its giant screens.
The fortunes of Imax, which has a $2 billion market cap, and its stock, have in the past been closely tied to the strength or weakness of the movies in release. It’s in the midst of an aggressive global growth campaign that will bring more stability. It currently has 868 theaters worldwide, with 419 scheduled to be built, many in China.
Those are a lot of positives, and bullish analysts have taken note.
MKM Partners last week slapped an “outperform” rating on Imax shares and raised its price target to $36. The Street’s Jamie Hodge identified it as a strong under-the-radar stock. Overall, six analysts rate Imax a buy, four suggest a hold and none say sell.
